Should You Buy Property in Spain Privately or Through a Company?

Buying property in Spain – especially on the Costa del Sol – can be a smart move, whether for lifestyle reasons, long-term investment, or rental income.

But one key question often arises before the purchase:

Should you buy as a private individual or through a company?

The answer depends on several factors, including your financial goals, tax situation, intended use of the property, and long-term plans.

This article breaks down the pros and cons of both options to help you make an informed decision.

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1. Buying as a Private Individual

Pros:

• Simplicity: Fewer legal and administrative steps compared to setting up and maintaining a company.

• Lower upfront cost: No need to establish and maintain a Spanish company (or foreign entity).

• Access to primary residence benefits: If you plan to move to Spain and make the property your main residence, you may qualify for tax reductions on future capital gains.

• Ideal for lifestyle buyers: If the property is mainly for personal use (e.g. second home or future retirement), individual ownership is typically more straightforward.

Cons:

• Capital gains tax: Individuals pay capital gains tax when selling, though there are allowances and possible exemptions for residents.

• No ability to deduct many expenses: Property-related costs (legal, renovation, furnishings, etc.) are not deductible unless the property is rented.

• Inheritance implications: Spanish inheritance tax applies differently to non-residents. Planning is essential.

Best suited for:

• Buyers who plan to use the home personally

• Retirees or lifestyle-driven purchasers

• Those not aiming for frequent property turnover or active investment

2. Buying Through a Company (Spanish or Foreign Entity)

Pros:

• Tax planning flexibility: A company may deduct a broader range of expenses and reinvest profits.

• Professional structuring: Suitable for investors purchasing multiple properties or engaging in development or short-term letting.

• Asset separation: Helps separate business risk from personal finances.

• Clear ownership structure for partners or investors: Multiple investors can hold shares in the company.

Cons:

• Ongoing costs: Incorporation fees, accounting, tax filing, and compliance.

• Higher scrutiny: Spanish tax authorities monitor foreign company activity closely, especially when used for holding private assets.

• Use restrictions: If the property is used privately, certain tax benefits may be lost or challenged.

• Exit complexity: Selling the property or exiting the company structure may involve double taxation if not carefully planned.

Best suited for:

• Professional investors or developers

• Buyers planning to rent short-term (Airbnb, etc.) with significant activity

• Groups of investors pooling funds

• Individuals seeking long-term tax optimization

Key Considerations

Residency status:

• Spanish tax residents are taxed on worldwide income.

• Non-residents are taxed on Spanish-sourced income and must file annual returns.

Short-term rentals (STR):

• A company structure may be more tax-efficient for high-volume rental activity.

• Note: Each autonomous region (e.g. Andalucía) has its own licensing rules.There has been major shifts in regulation about STR's lately – so please reach out to us to make sure you get the latest on this – if you plan doing STR.

VAT & Transfer Tax:

• Buying resale property typically incurs 7–10% ITP (property transfer tax).

• New build purchases may include VAT and stamp duty, depending on structure.

  Read more about this in this article - What are the buying costs 

  
  

Inheritance Planning:

• Companies can offer smoother transitions between family members or partners.

• Spain does not recognize trusts in the same way as some other jurisdictions.

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Financing:

• Spanish banks may offer different terms for corporate vs. individual borrowers.

On a side note – Spanish banks are generally not very fond of complex holding structures and off-shore accounts.

A Blended Option?

Some investors use a hybrid model: owning property through a company but reserving the right to use it personally under fair-market rental terms. This approach requires careful legal and tax advice.

There is no one-size-fits-all answer.

The right structure depends on your strategy, goals, and risk tolerance. Buyers are encouraged to consult with local tax advisors, lawyers, and real estate professionals before deciding.

Need help navigating the Spanish property market?

The 63ºNO team works with both private buyers and investor groups to find, assess, and structure the right deals – on and off the market.

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Disclaimer:

The content of this article is provided for general informational purposes only and should not be considered legal, tax, or financial advice. While we strive to offer accurate and up-to-date insights based on our experience in the Spanish property market, laws and regulations are subject to change, and individual circumstances may vary.

Before making any decisions related to property purchase, sale, or investment on the Costa del Sol, we strongly recommend consulting with a qualified local lawyer or tax advisor. If you do not already have one, we are happy to recommend trusted professionals we work with.

Images used in this article are for illustrative purposes only and are not intended to represent specific properties, people, or situations referenced in the content.

63ºNO assumes no responsibility or liability for any actions taken based on the information provided in our articles.